Hope you had a great weekend! 

May Foreign Reserves   $3.1 trillion versus $3.09 trillion estimate and April’s $3.094 trillion .

Takeaway: FX reserves are no longer newsworthy as they have been very stable though policy makers have plenty of dry powder. The irony is the FX Reserves’ increase were largely driven higher by the rally in US Treasuries due to the trade war escalation. 

Trade Data in US $ Year over Year

• Exports: 1.1% versus estimate -3.9% estimate and April’s -2.7%
• Imports: -8.5% versus estimate -3.5% and April’s 4%
• Trade Balance: $41.65B versus estimate $22.3B and April’s $13.84B 

Trade Date in CNY Year over Year

• Exports: 7.7% versus estimate 4.7% and April’s 3.1%
• Imports: -2.5% versus estimate 5.8% and April’s 10.3%
• Trade Balance: 279.12 versus estimate 136B and April 93.5B

Takeaway: Imports were light while exports and the trade balance exceeded market expectations. The view has been the light imports are indicative of a weakening domestic economy though weak commodity prices were likely a factor as well. Despite the positive numbers, the view is Chinese exports are rushing to get new orders out in advance of potential new tariffs. Global PMIs have weakened over the last month as the trade war is likely have an impact on the global economy. 

The Hang Seng returned from Friday’s market holiday and followed US equity markets higher +2.27%/+613 index points to close above 27k on moderate volumes that matched the 1 year average though higher than last week’s tepid volumes. 49 of the Hang Seng’s 50 constituents rose with Tencent gaining +3.81%/+103.9 index points, AIA +2.69%/+74.5 index points and CCB +2.1%/+43.1 index points while China Mobile declined -0.5%/-6.4 index points. A potential Fed cut and positive comments from the US and China following the G 20 finance minister meeting fueled markets higher. The HK stocks within the MSCI China All Shares gained +2.37% led by trade sensitive tech +3.94%, real estate +3.33%, staples +3.23%, energy +2.99%, communications +2.77%, healthcare +2.08% etc. It was a very strong day as the market has been consolidating. Southbound Connect volumes were light/moderate as buyers outpaced sellers by a small margin. 

The Shanghai & Shenzhen had a strong day gaining +0.86% and +1.33% on light volumes and strong breadth of 2,705 advancers and 840 decliners. One would have liked to have seen a stronger volume day.  The mainland stocks within the MSCI China All Shares gained 1% led by tech +1.89%, real estate 1.6%, staples +1.47%, industrials +1.04% and utilities +1.02% as financials lagged +0.61% as brokers were laggards as volumes have slumped. Mid caps outperformed as mega, large and small had a positive day. Northbound Connect volumes were light though buyers outpaced sellers leading to $1.139 billion of foreign investor buying.

• CNY 6.93 versus 6.91 Friday; CNY had been sitting at 6.9 since mid-May
• Yield on 1 Day Chinese Gov’t Bond 1.7% versus 1.61%
• Yield on 10 Year Chinese Gov’t Bond 3.2499% versus 3.25%
• Yield on 10 Year China Development Bank Bond 3.74% versus 3.74%
• Commodities were largely higher on the Shanghai & Dalian Exchanges with Dr. Copper +0.33%